India has Demanding of Certified Sustainable Palm Oil (CSPO)
The large population of India which reaches more than 1.3 billion or occupies the second position in the world as well as the growth of industrial and economic activity in this country, has implications to the high demand and consumption of vegetable oils. One of the vegetable oils that Indian people are interested in is palm oil.
Palm oil has succeeded in shifting the dominance of rapeseed oil and soybean oil in the structure of Indian vegetable oil consumption. In fact, since 2000, palm oil has become a vegetable oil that is widely consumed by Indian consumers with an increasing share of consumption, meaning that India is increasingly dependent on palm oil. Based on USDA data, India is also listed as the country with the second largest palm oil consumption in the world after Indonesia, with an average consumption of 9.4 million tonnes per year.
Most of India’s palm oil consumption is used to fulfill cooking oil needs, both in the form of bulk/unbranded (60 percent) and packaged/branded (30 percent), and the rest is used for industrial needs. The factor driving the high level of palm oil consumption in India is the price which is more competitive than other vegetable oils.
This factor fulfills the preferences of Indian consumers, most of whom belong to the low to middle income economic class. The Indian government has also been importing palm oil in bulk form and processing it into palm cooking oil, then distributing and selling it to low-income people at subsidized prices. So that the consumption of palm oil as a food product (palm cooking oil) can maintain the food security of Indian society as well as the inflation rate.
Although the Indian government through the National Mission on Oilseeds and Oil Palm (NMOOP) scheme, which is a domestic vegetable oil production policy (including palm oil), has not been able to meet the large demand for Indian palm oil. Therefore, most of India’s palm oil needs are still met from imports. India is also listed as the largest importer of palm oil in the world with a share of 20.4 percent during the 2015-2019 period.
Besides, being marked by the high import tariffs imposed on oil (CPO and RPO) as a form of protection, currently the import dynamics of the Indian palm oil market are also starting to lead to demands for the fulfillment of Certified Sustainable Palm Oil (CSPO) for palm oil to be exported to the country. In contrast to the markets of the European Union and the United States, India is the largest importer of palm oil in the world, where so far it is considered that the country’s palm oil import policy has not been linked to environmental issues which are widely blamed as the impact of the development of the palm oil industry.
But now, the certification of palm oil sustainability as an indicator that must be met to export palm oil is actively being discussed in India. The movement was initiated by RSPO India in collaboration with the Center for Responsible Business, Rainforest Alliance and WWF India. In fact, this collaboration has also given birth to the Sustainable Palm Oil Coalition for India in October 2018, which aims to promote and lobby the Indian government to encourage the consumption and trade of sustainable palm oil (CSPO certified) in India.
The CSPO-certified palm oil will trade in the Indian market at a premium price is estimated at around USD 30 per tonne. Indian palm oil consumers feel that this price level will be difficult to fulfill (not affordable) most of whom are low to middle income and tend to be relatively price-sensitive. This means that if there is an increase in the price of palm cooking oil, the decline in demand for this product will be greater, and vice versa. Meanwhile, Indian consumers who have middle to upper income as the right market segment for CSPO palm oil prefer to consume other vegetable oils that are considered healthier such as sunflower oil or rice bran oil than palm oil.
This shows that if the CSPO scheme is implemented, it is feared that the Indian consumers who actually consumes palm oil (low-middle income consumers) will not be able to absorb the CSPO palm oil, because the price more expensive. In addition, the risk of threats to Indian food security and high inflation that could trigger other macroeconomic problems, might occur in India.
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